Photonics Control Nabs $10M

Startup Intelligent Photonics Control Corp. has received $10.1 million in funding to pursue its dream of a one-size-fits-all chip for controlling optical amplifiers.

The second-round funding, following up a $5.6 million first round, was led by CDP Capital – Technology Ventures. Other participants included Business Development Bank of Canada, Novacap, SpringBank TechVentures, and Ventures West (see IPC Scores $5.6M, Names CEO and Photonics Control Pockets $10M).

Photonics Control, as the founders like to call their company, has been sneaking up on the industry via tradeshows. At OFC in Atlanta last March, officials booked a downtown hotel room and gave demos to 33 potential customers, says CEO Richard Timmons.

Timmons -- who is tall and doesn't run around in striped shorts -- stresses that the new round of funding increased Photonics Control's valuation. Those kinds of terms didn't come easily; earlier this year, the company was offered deals that would have brought the valuation down.

"The mindset in the optical VC space is automatically a down round," he says. "We made a decision to focus on a round that would protect the investment and provide a valuation increase."

With the extra money, the Ottawa-based company should be able to last until late 2005, long enough to reach profitability, Timmons says.

Like many chip makers, Photonics Control is trying to come up with a generic chip to replace homemade models. In this case, the chip controls an optical amplifier, ratcheting amplification levels up or down for particular channels in a WDM stream.

It's not that easy a problem. Aside from allowing an operator to alter gain in real time, the chip has to monitor the amplifier to keep the gain at optimal levels, making necessary alterations when new wavelengths are added, for example. Much of the problem comes down to developing the right algorithms.

"It's a nonlinear control-loop problem, and there are some interesting latency issues inside the control loop. That's something amplifier vendors have struggled with," says Ian Wright, CTO of Altamar Networks Inc., a subsidiary of Ditech Communications Corp. (Nasdaq: DITC) making optical transport subsystems that incorporate amplifiers. "There's a lot of learning involved in this for something that's so apparently simple."

Photonics Control's trick was to come up with one chip that works with multiple vendors' amplifiers. This wasn't possible before, because amplifiers behave differently; each one creates a different noise signature, for example. Algorithms that work for one company's amplifier won't necessarily be optimal for a competitor's brand.

For that reason, amplifier vendors design their own control algorithms -- and one detriment to Photonics Contol's business plan is that the vendors say this isn't a major difficulty.

"We have solved this problem," Wright says, "so the attraction would be if their chips are cheaper."

Moreover, it's not as if every line of amplifiers requires control algorithms to be developed from scratch, a process that can take six months to a year. Different amplifier models within Bookham Technology plc (Nasdaq: BKHM; London: BHM) can use similar software, says Robert Baker, Bookham's director of product management.

"We can cope with different variants of amplifiers simply by changing the firmware load," he says. "It might take a day. It's not that big a deal."

That kind if indifference is familiar to Photonics Control. The target customers are the amplifier makers themselves, but most of the benefit would go to amplifier customers, which made the concept a tough sell at first. "The systems integrators see the value first. The component makers see the value a little later," says Mark Adam, Photonics Control's CFO.

Photonics Control got its start when Paul Dietz, vice president of sales, heard about the amplifier-chip problem while running an Ottawa-based distribution outfit called Electronics Sales Professionals. He decided to hire a team to look at the question from a purely mathematical angle, avoiding the baggage of conventional optics and electronics thinking.

After incorporating in September 2000, the crew worked, literally, in Dietz's back office, eventually growing to a team of 30 full-time staffers and eight contractors (numbers that now include optics and electronics experts). The company originally targeted Erbium Doped-Fiber Amplifiers (EDFAs) only but eventually designed the chip to work with other amplifier types as well.

Photonics Control is shipping the amplifier-control chip for revenues, and some customers were using beta versions of the chip in their OFC demonstrations. Only two customers -- amplifier makers Gemfire Corp. and Lightwaves2020 Inc. -- have publicly said they're using Photonics Control's technology (see Duo to Develop Intelligent Amps).

Timmons says the company is developing products to work with other devices, such as optical performance monitors (see Duo Monitors Optical Performance) and variable optical attenuators. He'll be carting some of those to the National Fiber Optic Engineers Conference (NFOEC) in September, where Photonics Control will again book meetings at an off-site hotel.

— Craig Matsumoto, Senior Editor, Light Reading